73% of respondents believe executive pay is too high

Almost three-quarters (73%) of non-executive directors believe that executive remuneration is too high, according to research by Hay Group.

The research, The trouble with executive pay: insights into executive reward from the directors responsible for setting it, was conducted among 60 non-executive directors on FTSE 350 remuneration committees.†

It found that 87% of respondents think that executive reward needs to be changed, though there was no agreement among the interviewees as to how.

The research also found:

87% of respondents said that the connection between pay and performance is insufficient.

56% of respondents said that remuneration committees have become less effective at linking pay with performance for senior staff.

Jon Dymond, director at Hay Group, said: “More astute committees are starting to realise that forever chasing the median market rate is not the answer to setting executive pay.

“Rather, a more bespoke approach to reward, better shareholder engagement and more effective communication are sorely needed.”